Labour’s Leasehold Reforms Spark Fears of Millions of Unsellable Flats as Critics Warn of Market Collapse

Labour’s proposed leasehold reforms have sparked warnings from homeowners and industry groups that millions of flats could become difficult to sell, with critics arguing the changes risk rendering properties unsellable.

The concerns centre on Labour’s Leasehold and Commonhold Reform Bill, which aims to overhaul the leasehold system in England and Wales by introducing commonhold as a realistic tenure option and capping ground rents at £250. While the government describes the bill as an “unquestionable triumph” that addresses longstanding issues such as forfeiture and unresponsive freeholders, critics warn the transition process could leave many leaseholders unable to sell their properties during conversion.

Under the current leasehold system, flat owners possess the right to occupy their property for a set period but do not own the land or building, which remains under a freeholder. Freeholders often appoint managing agents who charge high fees for poor service, and ground rents — which can increase with inflation or fixed percentages — have made some properties difficult to mortgage or sell. Labour’s manifesto pledged to tackle “unregulated and unaffordable ground rent charges,” with Housing Minister Matthew Pennycook previously stating his preference for a peppercorn rate, effectively zero financial value.